BBCA
Contact our analyst Achmadi
23% upside, Buy
26th February, 2024
Price Rp9,800
Target price Rp12,050
Net Profit Grew by 19%
In 2023, BBCA made a profit of IDR48.64 trillion, a notable achievement with a 19.40% increase compared to 2022. This growth was mainly due to a 17.41% rise in Net Interest Income, resulting in the bank-only NIM ratio rising by 0.2% to 5.5%. Additionally, there was a significant 46.61% increase in net income from transactions at fair value through profit or loss, while provision expenses decreased by 50.01%, all contributing to the bank's higher profit. Looking ahead, it is forecast that BBCA will continue to experience growth in net profit in 2024, with a projected increase of +7.77% YoY to reach IDR 52.42 trillion.
Robust Loan Expansion
As of December 2023, BBCA reported strong loan growth, up by +13.94% compared to the previous year, surpassing the overall loan growth in Indonesia, which was 10.38%. The consumer segment saw the highest growth at 16.02%, followed by Corporate and Commercial & SME at 14.44% and 11.68%, respectively. The significant growth of the consumer segment was primarily boosted by Personal Loans (such as credit cards, payroll loans, pay later options, and unsecured loans), which grew by 21.7% YoY. Looking ahead, BBCA is expected to continue expanding its loan portfolio by 13.76%, outpacing the forecasted overall banking credit growth of 10%-12% YoY.
Increasing NPL Ratio, Yet Still Lower Than Industry Average
By December 2023, BBCA's bank-only NPL ratio rose to 1.90%, up by 20 basis points. However, it remained better than the industry average of 2.19%. The increase in the NPL ratio was driven by higher ratios in the Commercial & SME and Consumer segments, which rose to 1.95% and 1.38%, respectively. On the other hand, the Corporate loan segment performed well, with its NPL ratio decreasing. Looking ahead, we expect BBCA to further improve its loan quality, aiming for an NPL ratio of 1.66% by December 2024.
Consistently Growing Sustainable Financing Portfolio
BBCA demonstrated its strong commitment to integrating ESG principles into its business. This commitment is evident in its sustainable financing portfolio, which grew by 10.93% YoY, from IDR 183 trillion in December 2022 to IDR 203 trillion in December 2023. Furthermore, this portfolio has shown a CAGR of 12.89% since 2019. The primary contributor to the Green Financing segment was credit for Natural resources & sustainable land use, totaling IDR 67.8 trillion. Additionally, BBCA witnessed substantial growth in EV financing, with outstanding amounts increasing from IDR 0.27 trillion in December 2022 to IDR 1.275 trillion by December 2023. According to data from the IDX website as of December 20th, 2023, BBCA's ESG score was 22.67, ranking 20th among 79 public companies.
Valuation: 23% Upside, Buy
Based on our DDM valuation, we set a one-year target price of IDR 12,050, implying a valuation of 5.53x PBV and a potential upside of 23%. Consequently, we maintain a Buy rating for BBCA.
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